For quite some time the forward P/E estimates for UPS has always exceeded FDX. It was one of the reasons why UPS was always considered the value play while FDX the growth since their impressively growing earnings brought their P/E down. Well, after the just reported FDX Q2, their forward P/E (ending May 2014) is just around 20. Meanwhile, if we meet the analyst estimations for our FY 2014 (which may be raised as a result of a strong end of year and the revised upwards Q3 U.S. GDP), we'd come in at about 18.9. So, when one concludes that our dividend is about 5X greater (and I'm thinking we might raise by $.07/quarter) investors may finally see us as the better investment at current prices.
Personally, I'd like us NOT to split for a few reasons. First, when the share price is over the $100 threshold there is much less rapid trading activity. From my view I think that's good as it attracts the institutional and buy and hold buyer vs. the program crowd. Since fewer shares are traded they become harder to obtain thus raising the valuation somewhat. Secondly, we already have around 940K shares outstanding. If we did a 2 for 1 split, we'd be closing in on 2 billion. Third, I think it's important that we keep some degree of comparative pricing to out major competitor FDX. While I disagree vehemently with the differential in the present share price of each, it's a measurement that is meaningful. Just my opinion...
Actually it will be better at a lower price per share for New and small investors. It helps mentally because they can acquire more shares faster, I know the actual share are valued the same as if they were not spit but it does has a history of more demand from smaller investors. I have been an investor for a very long time even before going public and UPS is a sound long term investment, I have done very well as will most others too.
Sentiment: Strong Buy
I agree there will better pricing to buy in 2014 probably after earnings, and hopefully their not buying up here. They do need a handfull for the MIP, and see yahoo is saying about 928M outstanding. I personally want these level to stay at least until the 1st of the year so I can take a few more off the table, and keep diveristation going.
UPS has a significant amount of free cash and they have committed a portion of it to ongoing share buybacks. Given the present share value of over $103, what are the opinions of whether this remains a reasonable way to allocate capital expenditures? I know it helps the EPS and decreases the amount of cash to be paid out in dividends but the shares are awfully expensive right now- in fact, near an all-time high. Does anyone know whether the purchases they make are made in some other manner than the regular retail price that individual investors pay? I've always wondered about that...
As we al know, the going forward advice should be the key to any earnings report. They had as slight revenue beat despite EPS missing by a wide margin. Bu, speaking of margins, their operating margin increase 8 basis points from 6.5% to 7.3%. That allowed them to up their FY 2014 EPS increase guidance from 6-13% to 7-14%. For UPS consideration, as expected they noted this has been a strong holiday season which certainly bodes well for UPS. Keep in mind, there are shockingly high 12-monht price targets from respected analyst forms of $170 to as high as $190. This after FDX shares rising by 52% so far this year. It looks like if UPS follows that trend, we'll finally start making up all stagnated share price appreciation not to mention th dividend increase should be at the higher side of prognostications- maybe as high #$%$08.
One rather interesting thing about the FDX ground home delivery business. Finally, after a ongoing parade of increased margin expansion in this segment, the margins compressed from 15.9% to 14.9%. My dream of several state AG's cracking down on the dubious Independent contractor model generating past tax due collections and other penalties and the revision of their business model is slowly moving forward. The states who have entered this battle need the revenue and are hell-bent on getting it. Stay tuned on this one and hopefully 2014 dents their cheating ways and Fred Smith is shown as the business fraud his actions have demonstrated. .
and to add - Amazon ( as well as other online retailers) are absolutely driving this trend- why? Because the consumer ( the dollars) is demanding these type of flexibilities.. and is willing to pay.
As a 32 year UPSer... I have witnessed the shift in holiday volume levels- over the past 4 to 6 years- the additional volume from returns, exchanges and giftcard related online sales has extended the peak volume periods well into Jan. UPS has recognised this fact and has made changes in the post Christmas staffing levels and added labor flexibilities to properly handle these customers needs. This has allowed additional revenues while also keeping cost in check. A very good mix. But of course that is all relative and depends on what Mr. Market thinks should happen in terms of stock price
Similar story here, except sent back after 12 days of non delivery, even after them telling me 3 times on the phone it would be on the truck tomorrow. This company has some serious tracking and delivery problems. Must be using the same software as ACA website.
Sentiment: Strong Sell
GE just increased their dividend by 16% moving from 2.8% to 3.25%. If UPS did something similar, we'd be looking at about $2.88 or $.62 to $.72. If our peak season is going as well as the pundits have suggested, this is not a far-fetched number. The real hint at this possibility will be FDX's earnings conference call tomorrow. Granted, the report will only cover up to the end of November but analysts will no doubt ask a number of questions that will reference the peak season. Analysts expect adjusted net income to increase 17% YOY. The comps from last year are relatively easy since Hurricane Sandy depressed results from a year ago. For the entire year, FDX expects profits to increase 7-14%. Their cost cutting initiative which included early retirement incentives and retiring older aircraft to improve annual profits by $1.6B by FY 2015-2016 will be discussed. So, tomorrow could very easily result in UPS reaching a new all-time high, and if so, the base calculation for the 2014 dividend might come unexpectedly close to $2.88. BTW, such an increase would really make FDX's dividend look pale by comparison. l
then why are you crying if you never use or buy from any one who ships from UPS, this makes no smarts at all
Sentiment: Strong Buy
faster delivery tip- write a number on the side of that cardboard box by the river you're residing in
Gees, I thought he was still in the acting business. I guess he's just acting like disallusioned ex-employee or something. 13 Monkeys was a good movie though...